Market data costs for asset managers are chewing into investment fund performance and effecting capital-market efficiency, industry bodies claimed as they issued a call for data costs to be reduced.
Industry associations, including the European Fund and Asset Management Association (Efama), have called for internationally recognised principles to be adopted that would address “escalating” market data costs.
Tanguy van de Werve, Efama director general, said the increased cost of data is forcing many asset managers to significantly scale back data purchases.
“This leads to less informed markets and decreased competition. The high cost of data also negatively affects the net performance of investment funds and, by way of consequence, the return to investors,” he said.
Proposed principles would help remedy the situation, according to van de Werve, who was speaking as Efama, the International Council of Securities Associations (Icsa) and the Managed Funds Association (MFA) launched a report into the “excessively high market data fees and unfair licensing provisions”.
Market data costs include audit procedures and connectivity fees. The trade bodies said costs should be subject to full regulatory scrutiny to ensure that fees are “fair, reasonable, and not a burden on competition”.
According to David Lynch, chairman of Icsa, the rising cost of market data is a matter of significant concern in many jurisdictions.
“The efficiency of the capital markets in meeting the needs of its many business and investor users, as well as the broader economy, depends on the cost and quality of information that is available to them,” he said.
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